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[Jamaica] || ScotiaBank/ Bank of Nova Scotia

1.    Global Energy Solutions (GES) for Energy Derivatives

If energy is a significant component of your cost or revenue base, consider using energy derivatives to mitigate your exposure to market price fluctuations affecting energy products.

Through our partners at Scotia Capital™, you have access to our Global Energy Solutions (GES) team, which offers a wide variety of products that may reduce risks related to changes in the prices of oil, oil-derived products, natural gas, electricity and more.
Scotiabank’s energy derivatives provide you with access to:

•    Advice that helps you plan for energy consumption or sales in your business – keep in mind that energy is increasingly identified as a significant driver of business strategies around the world
•    Expertise and a growing platform that takes a global approach to create effective and timely solutions to the challenges surrounding strategic energy risk management

To learn more about energy derivatives, contact your ScotiaBank Relationship Manager or Scotia Capital’s Global Energy Solutions team at 1-416-945-4005 or Global_EnergySolutions@scotiacapital.com.

2.    Scotiabank backs low cost energy business projects

Helps Customers Cut Spend and Improve Efficiency

ScotiaBank has signaled its support for businesses looking to cut their energy costs. The firm announced in a release on Friday that its commercial and small business banking units have signed deals with three local companies in the small, medium and large categories to finance ‘green’ projects aimed at helping them source renewable energy equipment, conduct research on their energy efficiency and re-organize their operations to decrease their spend on oil.

Example: J Wray and Nephew
The Corporate and Commercial Banking Unit through relationship managers Madge Flake and Horace Stephens worked with J Wray and Nephew Limited (JWN) to ink an agreement which has seen the company significantly decrease their spend on oil, a major component in their production process. JWN utilizes in excess of 500,000 litres of Bunker C Oil and 250,000 litres of Diesel Oil to run its plants in Appleton and New Yarmouth. The company, an international rum giant, uses heat to produce its two main products, sugar and rum.

Scotiabank said it approached the company with a proposal, which was accepted, to fix the rate at which it would purchase oil over the ensuing six month period. This resulted in a net savings of approximately US$250,000 in the cost of foreign exchange

Scotiabank said it partnered with JWN with an Energy Derivative Facility, providing the company with access to leading-edge risk management solutions, to increase their overall business competitiveness while reducing exposure to economic/market risks.

Mike Braham, JWN financial director, spoke of the benefits of the facility which allowed the company to benefit from the aforementioned savings.

“It allowed the company to lock in its energy cost and benefit from a constant price despite fluctuations. Based on the company’s assessment in future oil prices, we would be prepared to utilize of facility of this nature in the future.”

Wayne Hewitt, scotiabank senior vice president of corporate and commercial banking spoke about the Hedge facility which the unit initiated.

“When J Wray and nephew bought into the Hedge with the Scotiabank Group, they bought the certainty of knowing what their price for energy would be. As a result, Scotiabank Group helped them take the risk of volatile oil prices out of their operating costs, helping the company preserve its margins. In the environment that ensued, the hedge served the added benefit of saving the company hundreds of thousands of US Dollars as market prices soared above the strike price on the deal.”

He added that contracts such as these are complicated and are only recommended to customers like J Wray & Nephew who understand the risks involved in derivative transactions and can negotiate the complex documentation that accompanies such transactions.

Meanwhile, Scotiabank is also responding to the heightened search for renewable sources of energy, which is now a growing demand in Jamaica as well as the world. Scotiabank entered a partnership with Wigton Wind Farm, the island’s largest supplier of wind energy located in the hills of Mandeville to purchase and install wind turbines to increase their energy capacity. The facility allowed the purchase of nine 2MW wind turbine generators similar to the ones in operation, which allowed an ease in the implementation and operation as well as lowering of operational costs.

The company was able to upgrade their generating capacity by 18 MW to 38.7 MW. Wigton, a subsidiary of the Petroleum Corporation of Jamaica has a partnership with the Petro Caribe which fully funded the expansion project at US$49.9 million. However, Scotiabank was able to provide a guarantee for the overseas supplier to begin construction of the turbines until full payment was made when the job was done. The corporate and commercial banking team of Scotiabank prepared a fifteen month letter of credit which provided security to the tune of $12 million, which was extended to Vestas Argentina SA, the suppliers of the equipment in Antigua.

“Even though this was a fully funded project, the supplier required a stand by facility through a letter of credit before they began construction. Our standby by letter of credit gave them assurance to construct and ship the turbines with the comfort of knowing that once they manufactured the goods, and submit the documents then they would get paid,” said Hewitt.

He said Scotiabank is also working with the Inter-American Development Bank to ensure that its customers in the small business sector identify areas in their operations where they can decrease the energy used and increase their cash flow by employing energy efficiency practices in their operations.

Contact:
Scotiabank Centre
Corner Duke and Port Royal Streets
Kingston, Jamaica
T: (876) 922-1000
F: (876) 922-6548



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